Daily update
Daily update
- Finally, several months later than it should, the Federal Reserve will cut rates today. Stressing data dependency when data are not dependable has led to this unnecessary delay. The Fed has been lucky the damage has been limited—middle-income borrowers locked in mortgages at absurdly low rates, and real rates for borrowers (deflated by income growth) have not risen too much.
- Economists expect a quarter-point rate reduction—markets are less certain. This, with a clear signal of two further cuts this year, allows the Fed to follow inflation lower without signalling panic. We also get the fabled dot plots of FOMC members’ projections. These are misleading; the complexities of policy cannot be summarized in a few pixels on a chart.
- UK August consumer price inflation was a little bit dull. Airfares are propping up inflation, which hints that the trend of spending on having fun is not fading. Further up the supply chain producer prices fell a little more than expected, with some downward revisions to previous data.
- Europe offers final August consumer price inflation, which no one will pay much attention to. There are a lot of ECB speakers, but investors have confidence in a steady rhythm of easing and are unlikely to be dissuaded.
